<p>Master’s Thesis in Competition Policy Title: ”The Microsoft Case – A reflection on the tying of Windows Media Player and the Commission Decision of 24 March 2004 (Case COMP/C- 3/37.792)” Author: Ursula Ferrari Tutor: Göran Wahlgren Date: [2005-05-23] Subject terms: Competition Policy, EU law, Abuse of dominance, tying Abstract This Master’s thesis is an analysis of the European Commission Decision in the Microsoft Case-COMP/C-3/37.792 and the tying as an abusive practice prohibited by Article 82 of the EC Treaty. In this case the European Commission (Commission) applied a rule-of-reason approach for the first time to Microsoft’s tying practice and considered it to be anticompetitive. Microsoft tied its Windows Media Player (WMP) to its client operating system Windows and after a thorough analysis done by the Commission, Microsoft was considered to have abused its dominant position. In the past the Commission and the European Court of Justice used a per se illegality approach to tying practices and it was enough to establish that a company which applied the tying strategy was dominant in the tying product market. The hostile approach taken by the Commission and the ECJ has been criticized by economists mainly because tying is a commonly applied business strategy in the world economy and companies apply this be-cause of the economic efficiencies that this business strategy leads to. The efficiency gains are indirectly past on to the consumers in the form of product quality and innovation, reduced transaction costs and lower prices. It is argued that tying in fact increase consumer welfare. Economists would therefore rather see a per se legality approach or at least a rule-of-reason approach in the future. Due to the complexity of the Microsoft case, the Commission had to do a thorough analysis of the actual impact that the tying of WMP had on the market and the foreclosure effects that this strategy might lead to. This was therefore the first time that a rule-of-reason approach was applied on the matter of tying. However, after the Commission’s Decision of the Microsoft case there is still uncertainty in this matter. There is a strong need for future clarification. Microsoft Corporation has lodged an appeal against the Commission’s Decision with the European Court of Justice but it will take several years before the ECJ will be able to give a final judgement of the case. Until then the legal certainty is yet still very unclear.</p>

<p>This thesis intends to analyze and clarify the legal position regarding abuse of a dominant position and particularly tying practices. The practice is central within European competition law and has been highly discussed in literature recently. In Article 102 TFEU it is explicitly stated that supplementary obligations which have no connection with the subject of such contracts, shall be considered as a way of abusing a position of strength. Although the method is often reasonable and very common within many business areas, it might be pursued as a tactic of excluding competition. The General Court’s decision in <em>Microsoft </em>led to some confusion as regards to the European approach towards tying practices. Prior to that judgment, the EU Courts appeared quite negative to the practice and seemed determined that the practice was in fact anticompetitive. For an example, in <em>Hilti </em>the Court found it sufficient that the company had deprived its costumers of a choice. The effects on competition were not analyzed in great detail and in most cases the EU Courts fined the undertaking involved in such business methods. However, in <em>Microsoft </em>the General Court took a new approach and focused on the actual effects that followed from the practice. Many argues that European competition law has moved from a <em>per se </em>approach to a <em>rule of reason</em> approach. In my opinion however, it seems relatively unclear whether or not this new approach shall apply to all versions of tying or if it was applied due to the certain circumstances involved in <em>Microsoft</em>. The tying practice involved a form of technical tying, i.e. an integration of two distinctive products. Cases prior to <em>Microsoft </em>mostly concerned a form of contractual tying and were treated very differently by the EU Courts. My opinion on the matter is therefore that it is not possible to declare a clear legal position regarding the practice of tying. There is a need for new judgments and official guidelines since the current situation deprives companies of legal security as concerns the practice of tying within European competition law.</p>

This thesis intends to analyze and clarify the legal position regarding abuse of a dominant position and particularly tying practices. The practice is central within European competition law and has been highly discussed in literature recently. In Article 102 TFEU it is explicitly stated that supplementary obligations which have no connection with the subject of such contracts, shall be considered as a way of abusing a position of strength. Although the method is often reasonable and very common within many business areas, it might be pursued as a tactic of excluding competition. The General Court’s decision in Microsoft led to some confusion as regards to the European approach towards tying practices. Prior to that judgment, the EU Courts appeared quite negative to the practice and seemed determined that the practice was in fact anticompetitive. For an example, in Hilti the Court found it sufficient that the company had deprived its costumers of a choice. The effects on competition were not analyzed in great detail and in most cases the EU Courts fined the undertaking involved in such business methods. However, in Microsoft the General Court took a new approach and focused on the actual effects that followed from the practice. Many argues that European competition law has moved from a per se approach to a rule of reason approach. In my opinion however, it seems relatively unclear whether or not this new approach shall apply to all versions of tying or if it was applied due to the certain circumstances involved in Microsoft. The tying practice involved a form of technical tying, i.e. an integration of two distinctive products. Cases prior to Microsoft mostly concerned a form of contractual tying and were treated very differently by the EU Courts. My opinion on the matter is therefore that it is not possible to declare a clear legal position regarding the practice of tying. There is a need for new judgments and official guidelines since the current situation deprives companies of legal security as concerns the practice of tying within European competition law.

This thesis deals with abusive tying practices and its concept under European Union law and United States of America law. Author tries to define concept of abusive tying practices and find necessary elements for legal assessment of tying. Moreover, author carries on the comparative analysis of the Microsoft tying cases in European Union and in United States of America, in order to find whether same elements of tying practices conditions the same outcome in the case law. / Šis darbas nagrinėja piktnaudžiaujančio susiejimo praktiką ir jos sąvoką pagal Europos Sąjungos ir Jungtinių Amerikos Valstijų teisės aktus. Autorė bando nustatyti piktnaudžiaujančio susiejimo veiklos koncepciją ir rasti susiejimo teisiniam įvertinimui reikalingus elementus. Be to, autorė atlieka lyginamąją analizę Microsoft susiejimo bylos Europos Sąjungos ir Jungtinių Amerikos Valstijų teismuose, su tikslu nustatyti ar tie patys elementai abiejose jurisdikcijose lemia tapačią teismų praktiką.

The credit rating industry is characterised by the high concentration of a small number of firms and, allegedly, this concentration stems from certain anticompetitive behaviours made manifest by the dominant firms in the industry. Therefore, as has yet to be done in empirical research, the purpose of this study is to carry out an exploration of the antitrust behaviours supposedly perpetuated by agents in the credit rating process for debt finance. The aim is to determine what influences, if any, the interactions and relationships in the rating process have on the sustenance of the oligopoly in the rating industry and on impeding new rating agencies trying to enter the market. Through the application of thematic analysis, this study aims to gather evidence on the behavioural motivations of rating analysts and underwriters in the rating process. Furthermore, the theoretical framework suggests notching and tying to be the anticompetitive behaviours that strengthen the oligopoly. Hence, the study finds that the drivers of anticompetitive notching in the rating process are the taking of haircuts and mapping, the guise of protecting investors’ interests, punitive ratings and a quid pro quo rating norm. Similarly, it finds that the enablers of anticompetitive tying are continuous dealing in the rating process, covert negotiation, repeat rating requests, ancillary services and the regulatory overdependence on credit ratings. In addition, this thesis explores the impediments of new rating agencies trying to enter the credit rating industry and finds that new rating agencies face peculiar market, regulatory and organisational barriers. Firstly, the market barriers comprise arbitrage, economic rents, investor preference and the issuer-pay model. Secondly, the regulatory barriers are discretionary regulation, new regulations and the designation of nationally recognised statistical rating organisation status. Lastly, the organisational barriers include down-trading, inadequate funding, the lack of geographic spread, low added intellectual value and a narrow product and service scope. Finally, this research recommends for regulatory authorities to agree to a harmonised convention on the recognition of credit rating agencies that may lead to the emergence of new robust agencies. It also proposes the standardisation of mapping practices in the notching process to reduce rating variance among credit rating agencies. Lastly, the research offers evidence of notching for competition and tying through informal services that may substantiate antitrust liability for possible antitrust intervention.

This thesis presents the results of a research programme to investigate the behaviour and robustness of reinforced concrete (RC) frames in fire. The research was carried out through numerical simulations using the commercial finite element analysis package TNO DIANA. The main focus of the project is the large deflection behaviour of restrained reinforced concrete beams, in particular the development of catenary action, because this behaviour is the most important factor that influences the frame response under accidental loading. This research includes four main parts as follows: (1) validation of the simulation model; (2) behaviour of axially and rotationally restrained RC beams at elevated temperatures; (3) derivation of an analytical method to estimate the key quantities of restrained RC beam behaviour at elevated temperatures; (4) response and robustness of RC frame structures with different extents of damage at elevated temperatures. The analytical method has been developed to estimate the following three quantities: when the axial compression force in the restrained beam reaches the maximum; when the RC beams reach bending limits (axial force = 0) and when the beams finally fail. To estimate the time to failure, which is initiated by the fracture of reinforcement steel at the catenary action stage, a regression equation is proposed to calculate the maximum deflections of RC beams, based on an analysis of the reinforcement steel strain distributions at failure for a large number of parametric study results. A comparison between the analytical and simulation results indicates that the analytical method gives reasonably good approximations to the numerical simulation results. Based on the frame simulation results, it has been found that if a member is completely removed from the structure, the structure is unlikely to be able to develop an alternative load carrying mechanism to ensure robustness of the structure. This problem is particularly severe when a corner column is removed. However, it is possible for frames with partially damaged columns to achieve the required robustness in fire, provided the columns still have sufficient resistance to allow the beams to develop some catenary action. This may be possible if the columns are designed as simply supported columns, but have some reserves of strength in the frame due to continuity. Merely increasing the reinforcement steel area or ductility (which is difficult to do) would not be sufficient. However, increasing the cover thickness of the reinforcement steel to slow down the temperature increase is necessary.

This project sought to evaluate the effects of video prompting in combination with backwards chaining to increase proficiency of tying shoe-laces using a changing criterion design. Two children, one diagnosed with Autism Spectrum Disorder (ASD) and one neurotypical were invited to participate in this study. Following baseline, shoe-tying prompt videos and backwards chaining were used to teach shoe-tying. Video prompting plus backwards chaining increased the typically developing participant’s proficiency with performing a larger percentage of steps of the targeted skill independently following intervention. However, the participant with ASD was unable to meet criterion and the study was terminated for him due to challenging behavior. These results indicate that the combination of point-of-view video prompts along with backwards chaining can be effective in teaching children to tie their shoelaces. These results also indicate that children with ASD may need additional supports with this intervention to reach acquisition criterion. Parents reported satisfaction both with the procedures undertaken and with the outcomes of the intervention. / Applied Behavioral Analysis

This dissertation is concerned with decision making in retail operations management. Specifically, we focus on pricing, variety, and inventory decisions, which are at the interface of the marketing and operations functions of a retail firm. We consider two problems that relate to two major types of retail goods. First, we study joint pricing, variety, and inventory decisions for a set of substitutable" items that serve the same need for the consumer (commonly referred to as a "retailer's product line"). Second, we present a novel model of a selling strategy for "complementary" items that we refer to as ``convenience tying," and focus on analyzing the effect of this selling strategy on pricing and profitability. We also study inventory decisions under convenience tying and exogenous pricing. For a product line of substitutable items, the retailer's objective is to jointly determine the set of variants to include in her product line ("assortment"), together with their prices and inventory levels, so as to maximize her expected profit. We model the consumer choice process using a multinomial logit choice model and consider a newsvendor type inventory setting. We derive the structure of the optimal assortment for a special case where the non-ascending order of items in mean consumer valuation and the non-descending order of items in unit cost agree. For this special case, we find that an optimal assortment has a limited number of items with the largest values of the mean consumer valuation (equivalently, the items with the smallest values of the unit cost). For the general case, we propose a dominance rule that significantly reduces the number of different subsets to be considered when searching for an optimal assortment. We also present bounds on the optimal prices that can be obtained by solving single variable equations. Finally, we combine several observations from our analytical and numerical study to develop an efficient heuristic procedure, which is shown to perform well on many numerical tests. With the objective of gaining further insights into the structure of the retailer's optimal decisions, we study a special case of the product line problem with "similar items" having equal unit costs and identical reservation price distributions. We also assume that all items in a product line are sold at the same price. We focus on two situations: (i) the assortment size is exogenously fixed, while the retailer jointly determines the pricing and inventory levels of items in her product line; and (ii) the pricing is exogenously set, while the retailer jointly determines the assortment size and inventory levels. We also briefly discuss the joint pricing/variety/inventory problem where the pricing, assortment size, and inventory levels are all decision variables. In the first setting, we characterize the structure of the retailer's optimal pricing and inventory decisions. We then study the effect of limited inventory on the optimal pricing by comparing our results (in the ``risky case" with limited inventory) with the ``riskless case," which assumes infinite inventory levels. In addition, we gain insights on how the optimal price changes with product line variety as well as demand and cost parameters, and show that the behavior of the optimal price in the risky case can be quite different from that in the riskless case. In the second setting, we characterize the retailer's optimal assortment size considering the trade-off between sales revenue and inventory costs. Our stylized model allows us to obtain strong structural and monotonicity results. In particular, we find that the expected profit at optimal inventory levels is unimodal in the assortment size, which implies that the optimal assortment size is finite. By comparison to the riskless case, we find that this finite variety level is due to inventory costs. Finally, for the joint pricing/variety/inventory problem, we find that even when the retailer has control over the price, finite inventories still restrict the variety level. We also propose several bounds that can be useful in solving the joint problem. We then study a convenience tying strategy for two complementary items that we denote by "primary" and "secondary." The retailer sells the primary item in an appropriate department of her store. In addition, to stimulate demand, the secondary item is offered in two locations: its appropriate department and the primary item's department where it is displayed in very close proximity to the primary item. We analyze the profitability of this selling practice by comparing it to the traditional independent components strategy, where the two items are sold independently (each in its own department). We focus on understanding the effect of convenience tying on pricing. We also briefly discuss inventory considerations. First, assuming infinite inventory levels, we show that convenience tying decreases the price of the primary item and adjusts the price of the secondary item up or down depending on its popularity in the primary item's department. We also derive several structural and monotonicity properties of the optimal prices, and provide sufficient conditions for the profitability of convenience tying. Then, under exogenous pricing, we find that convenience tying is profitable only if it generates enough demand to cover the increase in inventory costs due to decentralizing the sales of the secondary item. / Ph. D.

Cette thèse a pour but de développer un ensemble de méthodes permettant de gérer les problèmes de contact et de couplage de maillages dans le cadre de la méthode des éléments finis classiques et étendus. Ces problèmes d'interfaces sont traités le long de surfaces réelles et virtuelles, dites “surfaces immergées”. Le premier objectif est d’élaborer une formulation de Mortar tridimensionnelle, efficace et parfaitement cohérente en utilisant la méthode du Lagrangien augmenté monolithique (ALM) pour traiter les problèmes de contact et de frottement. Cet objectif est réalisé dans le cadre de la méthode des éléments finis classique. Divers aspects du traitement numérique du contact sont discutés : la détection, la discrétisation, l’évaluation précise des intégrales de Mortar (projections, découpage, triangulation), la parallélisation du traitement sur des architectures parallèles à mémoire distribuée et l’optimisation de la convergence pour les problèmes impliquant à la fois le contact/frottement et les non-linéarités de comportement des matériaux. Grâce aux formulations de Mortar tirées des méthodes de décomposition de domaines, les problèmes de couplage de maillage pour la classe des interfaces non-compatibles sont également présentés.En outre, une nouvelle méthode numérique a été élaborée en 2D : nous la dénommons “MorteX”, car elle rassemble à la fois des fonctionnalités de la méthode Mortar et de la méthode X-FEM (méthode des éléments finis étendus). Dans ce cas, le couplage des maillages entre des domaines qui se chevauchent ainsi que le contact frottant entre des surfaces réelles d'un solide et certaines surfaces immergées au sein du maillage d'un autre corps peuvent être traités efficacement. Cependant, la gestion du couplage/contact entre des géométries non conformes à l'aide de surfaces immergées pose des problèmes de stabilité numérique. Nous avons donc proposé une technique de stabilisation qui consiste à introduire une interpolation des multiplicateurs de Lagrange à grains grossiers. Cette technique a été testée avec succès sur des “patch-tests” classiques et elle s'est également avérée utile pour les méthodes Mortar classiques, ce qui est illustré par plusieurs exemples pratiques.La méthode MorteX est aussi utilisée pour traiter des problèmes d’usure en fretting. Dans ce cas, l’évolution des surfaces de contact qui résulte de l’enlèvement de matière dû à l’usure est modélisée comme une évolution de surface virtuelle qui se propage au sein du maillage existant. L’utilisation de la méthode MorteX élimine donc le besoin de recourir aux techniques complexes de remaillage. Les méthodes proposées sont développées et implémentées dans le logiciel éléments finis Z-set. De nombreux exemples numériques ont été considérés pour valider la mise en œuvre et démontrer la robustesse, la performance et la précision des méthodes Mortar et MorteX. / In this work we develop a set of methods to handle tying and contact problems along real and virtual (embedded) surfaces in the framework of the finite element method. The first objective is to elaborate an efficient and fully consistent three-dimensional mortar formulation using the monolithicaugmented Lagrangian method (ALM) to treat frictional contact problems. Variousaspects of the numerical treatment of contact are discussed: detection, discretization, accurate evaluation of mortar integrals (projections, clipping, triangulation), the parallelization on distributedmemory architectures and optimization of convergence for problems involving both contact and material non-linearities. With mortar methods being drawn from the domain decomposition methods, the mesh tying problems for the class on non-matching interfaces is also presented.A new two-dimensional MorteX framework, which combines features of the extended finite element method (X-FEM) and the classical mortar methods is elaborated. Within this framework, mesh tying between overlapping domains and contact between embedded (virtual) boundaries can be treated. However, in this setting, severe manifestation of mesh locking phenomenon can take place under specific problem settings both for tying and contact. Stabilization techniques such as automatic triangulation of blending elements and coarse-grained Lagrange multiplier spaces are proposed to overcome these adverse effects. In addition, the coarse graining of Lagrange multipliers was proven to be useful for classical mortar methods, which is illustrated with relevant numericalexamples.The MorteX framework is used to treat frictional wear problems. Within this framework the contact surface evolution as a result of material removal due to wear is modeled as an evolving virtual surface. Use of MorteX method circumvents the need for complex remeshing techniques to account for contact surface evolution. The proposed methods are developed and implemented in the in-house finite element suite Z-set. Numerous numerical examples are considered to validate the implementation and demonstrate the robustness, performance and accuracy of the proposed methods.

Agentes econômicos com posição dominante são capazes de se conduzir de maneira independente na sua atividade comercial. Da mesma forma, possuem todos os incentivos para manutenção desta posição, em detrimento de seus concorrentes, fornecedores e clientes. O presente trabalho visa, inicialmente, em estudo comparado da doutrina e jurisprudência no Brasil, União Europeia e Estados Unidos, identificar os elementos de cognição da teoria do abuso de posição dominante para cinco modalidades de conduta. A partir daí traçamos seus elementos de correlação com o propósito de sugerir uma teoria aplicada ao ordenamento jurídico pátrio, que passa pelo reconhecimento da concorrência como garantia institucional, de forma a estabelecer-se igualdade material segundo a teoria da função social dos meios de produção. A presença constante da concorrência nos mercados deve ser tratada como presunção de bem-estar social. E finalmente, valendo-se destes elementos de suporte, propomos uma teoria da responsabilidade especial para agentes econômicos em posição dominante, que implicaria o dever de autoaplicação dos limites permitidos para sua conduta comercial, cujo descumprimento ensejaria presunção relativa de efeitos deletérios ao mercado, segundo os parâmetros propostos. / Firms enjoying dominant position are able to conduct themselves independently in their commercial activities. Likewise, they hold all due incentives to maintain such position, in detriment of their competitors, suppliers and clients. The present work aims, initially, through a comparative study of the Brazilian, the European Union and the United States\' legal doctrine and jurisprudence, to identify cognitive elements of the abuse of dominance theory, for five different natures of conducts. Subsequently, we identify their elements of connection with the purpose of suggesting a theory applicable to the local legal system, which includes the recognition of competition as an institutional guarantee, so to establish a material equality according to the theory of social function of productive assets. The constant presence of competition on the markets shall be treated as a presumption of social welfare. And finally, based on such supportive elements, we propose a theory of special responsibility for dominant firms that implies in a duty of self-application of the permitted limits for their commercial conduct, and which infringement would entail a relative presumption of harmful effects to the market, pursuant to the proposed parameters.